Apple supplier Japan Display bailout talks could be worth $830M

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Japan Display could receive another cash injection of up to 90 billion yen ($830 million), as part of an ongoing financial bailout effort to keep the Apple LCD -- and possible OLED -- supplier alive.




The beleaguered iPhone screen supplier revealed on Thursday it had discussions with Ichigo Asset Management to receive financial support. However, depending on how much Japan Display agrees to accept, this could provide Ichigo with effective control of the company.

Ichigo will provide between 40 billion yen ($368 million) and 45 billion yen ($414 million) to Japan Display in the form of a common share purchase at up to 50 yen per share, two people familiar with the negotiations advised to Reuters..

While the maximum amount that could be received could be as much as 90 billion yen, discussions are apparently focused on just under half the potential funding. The full amount would grant Ichigo ownership of more than 50% of the company,

As part of the deal, it is believed Ichigo CEO Scott Callon would join Japan Display as a company co-chairman. The funding is expected to be finalized in January and completed in March.

Japan Display chief executive Minoru Kikuoka told media on Thursday "Ichigo has told us that they hope to see us turn around while keeping Japanese technologies with us."

Ichigo will be joining Apple and assembly partner Wistron in bailing Japan Display out. $200 million in financial support was promised by "a customer," Japan Display advised, with sources suggesting it is Apple and could be in the form of purchasing equipment for smartphone display production.

Japan Display's financial hole has largely been caused by a deal with Apple, where it borrowed approximately $1.5 billion to build an LCD display plant four years ago and would pay back to Apple over time. However, Apple's shift to OLED has led to fewer orders to Japan Display, and the company still owes in excess of $800 million.

Apple has been involved in bailout consortiums for Japan Display to keep the company running, and has offered shorter payment terms. Japan Display is believed rely on Apple for 60% of its revenue.

While the company is slowly moving to produce OLED panels, possibly for the Apple Watch, Apple may have to wait for up to two years before even receiving its first OLED screen from the company.

In November, it was revealed a former accounting executive was fired from Japan Display for embezzling approximately $5.3 million in funds between July 2014 and October 2018.

Comments

  • Reply 1 of 7
    sdw2001sdw2001 Posts: 17,421member
    Ah, Japan Display.  The Vietnam War of LCD companies.  
    SpamSandwichwatto_cobra
  • Reply 2 of 7
    Tim Cook was recently observed scrounging under the seat cushions for the money.
  • Reply 3 of 7
    Have to wonder if Apple is throwing good money after bad.
  • Reply 4 of 7
    Reminds me of the story of the sapphire company that borrowed a lot of money in response to Apple orders, real or imagined. The bankruptcy was real, though. 
    seanismorriswatto_cobra
  • Reply 5 of 7
    martinxyz said:
    Reminds me of the story of the sapphire company that borrowed a lot of money in response to Apple orders, real or imagined. The bankruptcy was real, though. 
    There's really no similarities between JDI and GTAT.  GTAT was selling wolf tickets. ← a dated phrase that I <3.  They were never going to be able to deliver on the promise of sapphire cover glass at volume.  At the time almost everyone in the industry said so.  Their furnace tech was already being questioned by Asian customer even before Apple appeared on the scene.  Apple was betting, with their assistance, the long shot would pay off.  It did not. 

    JDI built a big ass LCD manufacturing concern with Apple money.  They could deliver product.  Only problem, Apple decided they no longer needed that particular product.  They had moved on to OLED and left JDI holding the LCD bag with essentially no customer.
  • Reply 6 of 7
    Tim Cook was recently observed scrounging under the seat cushions for the money.

    You got that wrong. He was actually shoving money under the seat cushions!
    watto_cobra
  • Reply 7 of 7
    jcs2305jcs2305 Posts: 1,172member
    martinxyz said:
    Reminds me of the story of the sapphire company that borrowed a lot of money in response to Apple orders, real or imagined. The bankruptcy was real, though. 

    I don't think that was quite the story..

    GT Advanced was charged with fraud earlier this year..

    The Securities and Exchange Commission has charged GT Advanced Technologies and its former CEO with misleading investors about the company’s ability to supply “sapphire glass” for Apple’s iPhones.



    They also didn't borrow money they took advanced payment from Apple and were never able to meet the technical standards or performance targets they promised. So when the performance targets and specs weren't met Apple withheld payment.

    On earnings calls in the second quarter of 2014, however, Gutierrez falsely stated that GT expected to hit performance targets and receive the fourth installment payment from Apple by October 2014. GT ended up filing for bankruptcy shortly after, which the SEC says resulted in "significant investor harm."





    watto_cobra
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